Samsung Electronics has agreed to provide Intel with a CPU to help it solve a supply problem with its 14nm chip, Yonhap reported. Since the end of 2018, Intel has been trying to meet market demand for 14nm PC processors, and recently apologized to customers for delaying shipments.
Intel has chosen Samsung as its third-party foundry to increase production capacity of its 14nm chips to deal with chronic processor shortages, according to semiconductor industry sources. “Samsung was chosen as a partner because it was one of several foundrys that could meet Intel’s 14nm production needs,” the source said, without detailing the production schedule.
Although the 14nm process is mature, Intel’s 14nm CPU has been out of stock since 2018, and in an apology statement last week, Intel stressed that capital investment in 14nm wafer capacity this year has reached a record level in order to meet market demand, while also working to increase 10nm wafer capacity.
The letter of apology also noted that supply remained tight in 2019, despite increased capacity that resulted in double-digit growth in PC CPU supply in the second half of the year compared to the first half.
To ease the supply pressure on the 14nm CPU, Intel also returned some motherboard chips to 22nm, such as the H310C, or B365.
In addition, Intel chooses a third-party foundry. Sources say Intel’s foundry does not make high-margin CPU processors, but just some of the chips that ship big but are low-margin. For example, The Nervana NPP-T neural network accelerator was manufactured with TSMC 16nm and the Mobieye automotive chip and the Barefoot network chip was made with TSMC 7nm.
It followed rumours that Samsung would replace the 14nm Rocket Lake processor for Intel. But since no production plans have been announced this time, it is unclear whether Samsung will help Intel contract the 14nm Rocket Lake processor.
The tie-up is also good for Samsung, which is expected to boost bids for its non-memory chip business after announcing a 133 trillion won ($112.9 billion) semiconductor investment plan earlier this year.
Samsung Electronics, the world’s largest memory chip maker, has rolled out advanced chip manufacturing processes to close the gap with Taiwan’s TSMC. TSMC is the world’s leading semiconductor foundry with a market share of about 50%.
With TSMC’s growing position in the wafer foundry market, Samsung is making more efforts to acquire new customers, and with the latest generation of Co-employed Qualcomm processors, Samsung has made new progress in its foundry business this year, but it is not easy to surpass TSMC’s market share.